Coming (At You) Soon

Jeffrey Katzenberg's cure-all for an ailing movie economy, in all three dimensions

As far as Jeffrey Katzenberg is concerned, up to now there have been but two "revolutions" in the movie business: the mass introduction of sound with 1927's The Jazz Singer (itself, a process 30 years in the making) and, a year later, the debut of The Viking, the first feature presented in Technicolor. All of cinema's other advancements, from CinemaScope's widening of screens in the early 1950s to Lucasfilm's THX sonic boom in 1983, were mere evolutions—giant steps, yes, but in others' tracks.

At least, this was the theory advanced by the chief executive officer of DreamWorks Animation as he traveled the country earlier this month touting the film business's "third revolution": 3-D movies. (And, yes, this revolution too has been more than a century in the making; Brit photographer William Friese-Greene, who saw in stereo, would no doubt appreciate his due.) No longer, says Katzenberg, will 3-D serve as a cheap "gotcha" gimmick—an exploitation hustle—but as a way to advance storytelling and "emotionally immerse" the audience into the film. He insists 3-D "captures the essence of being there in a unique way. And it re-energizes in a very big way what it means to come to the cinema...which is a shared, communal experience."

As opposed to, oh, that home-theater system and high-def TV keeping you home most nights. Especially now, as everyone's pinching their pennies instead of someone else's overpriced popcorn.

To prove his point, Katzenberg screened three scenes from DreamWorks' March 2009 release, Monsters vs. Aliens, starring Seth Rogen and Stephen Colbert, in an homage to the kind of '50s films that used paper-glasses 3-D to compensate for the lack of, well, everything else. Katzenberg is right to be excited about the future: For the first time, a 3-D movie isn't a gateway drug to ibuprofen. Specks of dust and chunks of rubble fill the theater, and a 50-foot-tall woman, voiced by Reese Witherspoon, does indeed look ready to bust out of the cineplex ceiling.

But rendering the passive into the interactive comes with a steep price tag at precisely the wrong time. A planned $150 million movie wound up costing an extra $15 million, for which DreamWorks will charge moviegoers an extra $5 at the ticket booth. And theaters will have to upgrade their equipment: Screens will need to be more reflective, and projectors will have to throw a brighter light. Such redos will cost theaters "tens and tens of thousands," Katzenberg acknowledges—an exorbitant price tag evidenced by the relatively few number of theaters that have made the upgrade thus far, despite such successful recent 3-D releases as Journey to the Center of the Earth and the Hannah Montana and U2 concert films. Katzenberg had hoped there would be 5,000 3-D screens ready to show Monsters vs. Aliens by March; in reality, he'll be lucky to find half that many.

"The implementation timeline has been extended by the economy," Katzenberg admits.

Indeed, though 2008 box-office receipts are on pace with 2007's record-setting $9.6 billion haul in the United States alone, actual ticket sales are down—due, in large part, to the rising cost of the average ticket. (Estimates are $7.08 per ticket in '08—or 20 cents more than those in 2007.)

"In order to prosper, in order to survive, in order to grow—whatever you want to say—movies are..." Katzenberg pauses. "Look, even though we're having a pretty good year this year, movies are in decline. Now, I'm talking about in movie theaters, not in life. Movies are seen in more ways, and at more times, and by more people than ever before, but the movie-theater experience is declining and has been declining for years and years and years. To me, this seems like an opportunity to reverse that. So it's a business opportunity and a creative opportunity.

"As of today, there are only three businesses in America that seem to be doing well: Walmart, McDonald's and movie sales. The gross revenue for movies is going to be slightly up from last year, which was a tremendous year. We'll be slightly under $10 billion, even though admissions are going to be a teeny bit down from last year. Tell me any business that can say that about themselves in 2008."

But a bit of history to keep in mind: Just as talkies were booming, literally and figuratively, the Great Depression struck—and, yes, even then studio chiefs insisted theirs was a "Depression-proof business." As Tom Schatz reminds in his definitive early-Hollywood history The Genius of the System, "1930 was Hollywood's biggest year ever, as theater admissions, gross revenues, and profits reached record levels. Economic reality quickly caught up with the movie industry, though, and the studios paid dearly for their blissful ignorance. Falling attendance, depleted reserves, and tight fiscal policies staggered the studios by 1931-'32, especially those that had expanded most aggressively in the 1920s."

The current recession, expected to last well into 2010, may be the least of Hollywood's problems; that pesky actors' strike, now more promise than threat, may prove considerably more staggering than folks sitting on their couches and their wallets. And DreamWorks Animation is hardly the best benchmark: It released only two films in 2008—Kung Fu Panda and Madagascar 2—both of which were among the top-grossing films of the year. The fact that they were also smart, entertaining films aimed at children and adults equally didn't hurt. Beats the hell out of a second mortgage spent on a day at the amusement park.